Microsoft attorney talks patent reform

It takes flow charts to keep track of all the mobile patent lawsuits under way.

Apple sued HTC, while Kodak sued Apple, Samsung and Sony. RIM filed suit against Kodak and Motorola. And what are called non-practicing entities (or patent trolls, if you prefer) such as Intellectual Ventures and NTP have sued pretty much the lot of them.

It can seem — and some have argued — that the patent system itself is broken, forcing companies to spend more time and money on legal battles than research and development.

But that view betrays an ignorance of history, according to Horacio Gutiérrez, the deputy general counsel in charge of Microsoft’s intellectual property group.

In an interview in this morning’s Chronicle, he said that a flurry of patent disputes has followed any new disruptive technology at least as far back as the telegraph, as companies sort out whose inventions the latest innovations built upon. The smart phone, a veritable Swiss Army knife of digital tools, is no exception.

In the rest of the interview, which continues below, Gutiérrez discussed recent efforts at patent reform and additional changes that are necessary.

Q: I want to talk about the America Invents Act, the recently passed reform of U.S. patent laws. Microsoft was in support of that measure and I saw you did a favorable blog post. What were the key points that you think will make a dent?

Microsoft was, together with almost every company in the technology sector, quite involved for almost seven years in the process that led to the enactment of the America Invents Act.

The final product has a number of provisions that we believe in the long-term will benefit the patent system and will ultimately increase the clarity of the rules and will also increase the quality of the patents coming out of the patent office. I’ll mention two issues that we think are useful.

The first one is the post grant review; the ability to have, without the need to go to court, an administrative process in the Patent and Trademark Office, where we could have patents that have been issued reviewed.

It is an administrative proceeding, it’s a lot less expensive than going to court and it’s conducted before the office that issued the patent, so the office that actually has the deepest understanding of the technology.

But at the same time, it allows companies like Microsoft or any company that feels that there are patents issued that should not have been issued, to (speak up). It allows for the weeding out of those patents from the system before the end up in court, creating the pain and cost associated with litigation.

The law also harmonizes the U.S. patent system with the “first to file” system that exists around the world. We think that is also important in terms of creating consistent rules across the world. It’s sort of maintaining the leadership of the United States when it comes to IP systems worldwide.

Q: The complaint was that first to file — which grants patents to the first person to file for one, rather than the person who shows they first invented it — would strongly favor big, deep-pocketed companies that have the resources to flood the patent offices, making it harder for startups or inventors to compete on an even playing field.

I don’t think, in practical terms, the fear that people are expressing in that regard will hold up.

One of the key things that we fought for during the legislative process was, if the first to file change was introduced, there should also be a recognition of prior use rights.

It basically says that, if a person is sued for patent infringement, but that person can prove that it had commercially used the patented invention at least a year prior to the filing of the patent application, such prior commercial use is a defense to the claim of infringement.

Prior use rights really soften, significantly, what could be perceived as the harshness of the first-to-file system.

Q: You mentioned that Microsoft has been the victim of patent trolling, so do you think that additional legislative or judicial responses are necessary to better define where this line is drawn, between what is a valid patent and what is patent trolling?

You have to separate the discussion about what is a legitimate patent from who is the person asserting the patent.

I think we’ve come a long way, but there remain some areas where the practices in the context of litigation as well as in some administrative proceedings could be adapted to really try to curb the abuses of the system by nonpracticing entities.

There is currently debate emerging over whether nonpracticing entities should be entitled to obtain an injunction either in court or in the International Trade Commission.

So there will be opportunities over time to continue to look at the patent system, from a legislative, judicial or administrative perspective, to ensure that the patent system is not abused by anyone.